The latest IRS effort to curb a tax avoidance maneuver used by large partnerships could invite an onslaught of litigation challenging the agency’s authority.
The agency announced a three-pronged plan Monday to go after partnership basis shifting transactions, a technique that involves a business shifting tax basis to other related legal entities to shrink tax liabilities. It is expected to raise more than $50 billion over 10 years, the Treasury Department said.
But the tax code allows for a change in basis, tax professionals said, so regulations the IRS said it intends to release will likely be challenged in court. ...